PMEGP (Prime Minister’s Employment Generation Programme) Loan

The objectives of PMEGP are as follows:  

1. To promote entrepreneurship by promoting new businesses, specifically in the non-farm sector. 

1. To promote local employment for local people and reduce reliance on urban migration. 

1. To support marginalized groups by giving higher subsidies to deficient communities and economically backward states. 

1. To promote regional development and balanced economic growth with the help of decentralized industrial activity. 

Features of PMEGP 

The following are the key features of PMEGP:  

1. Credit-Linked Subsidy: PMEGP reduces the burden of an entrepreneurs the repayment by linking institutional finance with government subsidy portion. 

1. Project Cost Ceiling: For new manufacturing, the project cost ceiling is Rs. 50 lakh, whereas for business or service unit it is Rs 20 lakh. 

1. Special Category: Has higher subsidy rate for SC, ST, OBC, minorities, women, ex-servicemen, transgenders, differently able persons; and entrepreneurs from Northeast region, aspirational districts, hill areas, and border areas. 

1. Geography: Scheme is available in both rural and urban areas, with greater subsidy for rural location to promote the decentralisation of economic activity. 

1. Second loan facility: For existing PMEGP, REGP and MUDRA units for technology modernisation, and expansion support upto project limits of Rs. 1 crore for manufacturing and Rs. 25 lakh for services. 

1. Collateral-Free Loans: Depending on the RBI guidelines, loans amounting to Rs. 10 lakh, which is classified as eligible, need not have collateral. 

1. National coverage: Assistance through the extensive national network of KVIC, KVIB and DIC. 

Benefits of PMEGP 

The advantages of PMEGP are outlined below:  

1. Government subsidy funding allows a reduction of the fundraising time for new entrepreneurs and reduces the financial liability of entrepreneurship. 

1. Local employment for locals from PMEGP creates direct employment and indirect local employment too. 

1. Room for inclusive growth for marginalized groups who may not have access to funding for business. 

1. The formation of second loans opportunities for upgrading business and use of modern technologies. 

1. Made for those venturing into new entrepreneurship for the first time. 

Eligibility Criteria 

The eligibility criteria for PMEGP are:  

1. Any Indian citizen aged 18 years or above can apply. 

1. For projects exceeding Rs. 10 lakh in manufacturing or Rs. 5 lakh in services, the applicant must have completed at least Class VIII. 

1. Only new projects are eligible for the first loan; existing units that have already availed government subsidies under other schemes are excluded. 

1. Existing PMEGP, REGP, or MUDRA units can apply for the second loan facility for business expansion or technology upgradation. 

Documents Required for PMEGP Loan

Here are the documents you will have to submit for Prime Minister's Employment Generation Programme:

1. Caste certificate
2. Aadhaar Card
3. PAN card
4. Project Report
5. Special category certificate
6. Education or skill development or Entrepreneurship Development Programme training certificate
7. Rural area certificate
8. Registration certificate, authorisation letter and certificate for special category when required, for institutions

Nature of Assistance and Subsidy Rates under PMEGP  

Under the Prime Minister's Employment Generation Programme (PMEGP), government assistance is provided in the form of a subsidy to reduce the amount the entrepreneurs will have to pay back to the bank. In relation to the formal amount of assistance, the amount is dependent on:  

1. The type of project (new venture or upgradation/ modernization of existing unit).  

1. The category of the applicant (General or Special Category). 

1. The location of the project (Urban or Rural area). 

For New Ventures 

1. General Category applicants (the applicants who belong to neither of the reserved or special category) are required to contribute 10% of the total project cost from their own funds. 

1. If the projects are located in urban areas, they would get 15% of the project cost as a subsidy from the Government. If the projects are located in rural areas, they would get 25% of the project cost as subsidy from Government. 

1. The Special Category of applicants (SC, ST, OBCs, minorities, women, ex-servicemen, transgenders, differently abled people, people from Northeastern Region, hill areas, border villages, aspirational districts, etc.) are only required to contribute 5% of the project cost. 

1. They would get a subsidy of 25 % of the project cost if their project is located in urban area. 

1. They would get a subsidy of 35 % of the project cost if their project is located in rural area. 

For Upgradation of Existing Units 

This scheme would be applicable to existing PMEGP, REGP, or MUDRA units wanting to modernize or upgrade their units. 

1. All categories (General or Special) will be required to provide 10% of the project cost as their own contribution. 

1. The subsidy for all the locations except for the Northeastern Region (NER) and Hill States will be 15% of the project cost. 

PMEGP Exclusions 

Not all businesses / applicants may be eligible for help through the Prime Minister’s Employment Generation Programme (PMEGP). In simply setting up a scheme like this there are certain prohibitions to provide a level of eligibility that targets socially worthwhile and economically viable support, below are the excluded categories: 

Ineligible Units for New PMEGP Enterprises 

1. Existing Units of PMRY, REGP or any other Central or State Government schemes are ineligible. 

1. Units that have sought or accepted a government subsidy under any other scheme(s) of the Government of India or State Government cannot seek help again for the same purpose. 

1. Family Limit: Only one person per family can avail PMEGP support, in the setup of a project. Definition of family: Includes self and spouse. 

Negative List of Activities (Forbidden programme areas). There are certain industries, businesses, and services that are expressly forbidden from receiving PMEGP funding. 

Businesses related to meat and intoxication. Any business related to meat (slaughtered) e.g.:  

1. Meat processing,  

1. Meat canning 

1. Any place to eat that sells meat items. 

1. Production, manufacture or sale of intoxicants e.g. Beedi, Pan, Cigar, Cigarette 

1.  Any hotel, dhaba or outlet which sells liquor. 

1. Any preparation or production of tobacco and raw materials. 

1. Tapping of Toddy, for sale. 

Cultivation and Main Farming Activities. Any business engaged in cultivation of crops or plantations like  

1. Tea 

1. Coffee 

1. Rubber 

1. Sericulture (cocoon rearing) not funded as standalone activity and horticulture, floriculture and animal husbandry. 

Activities Banned by Local Authorities 

1. Business or activity banned by local authorities for environmental or socio-economic reasons is eligible. 

Note: Activities that add value e.g. processing leaves for tea or making packaged products of coffee. Off-farm or farm-linked activities relating to sericulture, horticulture, or floriculture are allowed. 

PMEGP – Activities Permitted and Prohibited 

How to Apply for PMEGP - Step by Step Guide 

The Prime Minister's Employment Generation Programme (PMEGP) provides applicants with both online through the main website as well as offline through physical forms. Below is the entire process walked through step by step for both options. 

Online Application Process for PMEGP 

Step 1: Visit the PMEGP's Official Website 

1. Go online to www.kviconline.gov.in and open the PMEGP e portal. 

Step 2: Select Application Type 

1. You can select ‘Online Application for Individual’ if applying as an individual or ‘Online Application for Institution’ for an organisation. 

Step 3: Complete the Application Form 

1. Personal Information - Your name, address, age, category, educational qualification, etc. 

1. Business Information - Type of enterprise, sector (manufacturing/service), estimated cost and location. 

Step 4: Upload Documents 

1. Aadhaar card, address proof, caste certificate (if applicable), educational qualification and detailed project report. 

Step 5: Application Submission 

1. Be sure you are comfortable with all the details before submitting the application. As soon as an application is submitted, you will receive an application ID for tracking. 

Step 6: Application Review by the Agency/Implementing Agency 

1. The agency (KVIC, KVIB, or DIC) is responsible for confirming eligibility and then submitting your application to a participating bank. 

Step 7: Bank Credit Appraisal and Approval 

1. The bank will review your project to ensure feasibility, check your creditworthiness, and provide approval if standards are met. 

Step 8: Loan Disbursement and Subsidy Release 

1. The bank will disburse the total amount of the loan. The subsidy part of your project will be credited by the government after the project has been completed and verified. 

In-Person Application Process for PMEGP 

Step 1: Obtain the Application Form 

1. You can either download it from the PMEGP official site or pick it up from the closest KVIC/KVIB/DIC office. The application form is available in 11 languages, including Tamil, Marathi, Punjabi, and Assamese. 

Step 2: Complete the Application Form 

1. Fill out the information, such as personal/proposed project, category, type of business, sector, and its location. 

Step 3: Submit All Required Documents 

1. Aadhaar card, residential proof, caste certificate (if applicable), educational qualification, and detailed project report. 

Step 4: Submit Application Form/Application Documents to Implementing Agency 

1. Submit the application documents to the nearest office of KVIC/KVIB/DIC. 

Step 5: Verification - Agency Reviews and Maintains Application 

1. Agency official will review application details and verify eligibility before sending it to the bank. 

Step 6: Credit - Bank Appraisal, Approvals 

1. The bank will review the proposal, credibility check, granted approval if considered viable. 

Step 7: Sanction and Subsidy Transfer for Loan 

Once the bank releases the money to you, the transfer of subsidy amount will occur after the successful implementation of the project. 

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